Abstract

The end of apartheid presents South Africa with an opportunity to realise its
full potential as an important member of the global political economy. This follows a
period of three decades of progressive isolation from the global community. The major
external challenge facing South Africa now is that the world it is trying to integrate
with is much changed from the one it was previously part of. It is of vital importance
that as an emerging nation it fully appreciates the nature of this changed world.
The global political economy has changed rapidly over the past decade. Mikhail
Gorbachev became General Secretary of the Soviet Communist Party and after 1985
he gradually introduced the process of reconstructing the Soviet economy, known as
perestroika. This, together with glasnost, began a process of rapid change culminating
in the collapse of communism throughout Eastern Europe and the former Soviet Union
and an end to the Cold War. Thus, western ideas of democracy became dominant and
democratic regimes (although not necessarily liberal democratic) became the world's
dominant form. Economically, the most important global trend has been that of
liberalisation together with what the literature calls globalisation. Rapid advances in
transport and communications technology, combined with the trend towards market
deregulation have lowered the barriers between national markets; technology and
skills, rather than natural resources and cheap labour have become the crucial enabling
factors for competing in the global economy.
This thesis contends that such a background gives South Africa little choice but
to integrate into the global system if it is to secure the best conditions for its economic,
social and political development. It also argues, that as a middle-income developing
country or economy in transition, the parameters within which it can achieve this
integration are fairly narrowly defined.
South Africa is quite unique in the nature of its structural problems due to the
legacy of apartheid. It remains a deeply divided society with great extremes of wealth
and poverty. Its economy has a dualistic nature with a formal industrial sector and a
large underdeveloped informal sector. To compete in the global marketplace South
Africa must be able to attract additional production factors and resources from outside.
Due to the high levels of protectionism inherited from the apartheid era there is a need
for a reorientation of South Africa's trade policy. Relations with its principal trading
partner, the European Union, will be crucially important here.
Finally, South Africa cannot avoid its geographical location in Africa. An
underdeveloped and politically unstable Southern Africa would greatly reduce South
Africa's chances of successful global integration. In contrast a stable, more integrated
region, would be to the benefit of South Africa, not least in creating a regional bloc
able to exert greater leverage at a global level. However, given that regionalisation
may not be wholly compatible with greater global integration, at least in the short to
medium term, South Africa faces some difficult policy choices ahead.